Start-ups are now one of the main forces propelling the industry forward. The tech sector is a great example of how it works. When a new service or product is introduced, revenue isn’t the only interest. The domino effect will surely be in action for years to come. Think about 5G. Is the only thing that is going to be affected by it is how fast people can download a YouTube video over their cellular network? Of course not. There are hundreds of positive side-effects on gadgets and businesses all over the world. Innovative startups in any industry will have the same effect. Here is why investing in these startups is smart.
Innovation Drives Revenue
There are many reasons to invest money but it mostly comes down to showing a return. The strategy of investment will be determined by the time it takes to achieve the desired return. Those who invest in these start-ups get returns way above your average ROI. The catch is that it requires high risk. Investing in something new and innovative can go in any direction. Those looking for small gradual returns aren’t investing in startups. Coca-Cola or some other blue-chip investment is better for those investors. Investors in an-early stage tech start-ups, never really know what the future holds.
There is no such thing as a guarantee or certainty and this is where venture capital comes in. Take note that only about ten percent of all start-ups are funded venture capital. The rest goes to savings, credit loans, and friends and family plus crowdfunding. When someone does get funded by a VC or an angel investor, they are much more likely to succeed. Unlike the entrepreneur, venture capital firms and investors have the experience that enables them to better understand the whole picture.
Of course, even VCs take risks when they are uncertain, but you can be sure that they take their job of dissecting every potential investment as thoroughly as possible. When they invest in a start-up, they are taking a calculated risk. When you are taking innovation into account, the whole formula gets murky, and that’s where only experience can shine some light on things. That’s why we turn to David Kezerashvili, owner of Infinity VC, to help us understand what industries look the most promising right now and why.
Where Innovation Is Needed The Most
Startups mainly need funds and guidance, and that’s exactly what a venture capital firm can provide. Most successful VCs are either specialized or have different experts and departments. One person just can’t know everything about Biotech, cryptocurrency, eCommerce, or any other industry that is represented. These are all different fields with nuance. The devil is in the details and a good VC firm pays close attention to them. Kezerashvili is quite the entrepreneur himself, with real estate development companies both in his native Georgia and neighboring Ukraine. When he diversified into venture capital, with a philosophy to back his decisions.
Watching the world economy rapidly transform in the past decade, he decided that he wanted to be part of the driving force behind these ongoing changes. That is innovation. Where these rapid changes can lead to rapid outcomes and revenue, the sweet spot lies. The world has to adapt, and so do our investment strategies. Investing in innovation is both highly effective, and even further snowballs the rate at which we are advancing in all areas of life. Here are the three key industries he invests in right now.
The major competitive advantage of Fintech is that it has unlimited reach. Every business, individual, or other entity is connected to money somehow. Even non-profits entities need financial services. Thus, theoretically, everyone is a potential client or user. If you take into account the statistics, which show that for each five dollars venture capital firms invested one went to fintech, you get all the reassurance you need.
Online shopping has been around for a while, and it’s not going anywhere. Digital commerce is already taking over the traditional route, and sales are booming across all kinds of platforms- be it Amazon, Instagram shopping or directly ordering from companies online.
We’ve spoken briefly of 5G in the beginning, but that’s just a small part of what is happening with mobile tech. Think of all the new opportunities that will be created when it is fully implemented. It’s a revolution in terms of how our phones and gadgets are going to be used. The never-ending desire for the next-new thing makes sure the whole industry is working hard to satisfy the customer. The combination of artificial intelligence and machine learning is on the verge of breakthroughs, and in the end, it will play a major role in every industry you can think of.
Kezerashvili has already invested through Infinity VC in a number of video tech companies. The video field is always changing, with the most transforming revolution in the past few years being the prompt transition to video streaming services from cable TV. Services like Netflix or Hulu are breaking all the records of popularity yearly, and there are now more than a few dozens of successful services like these. Another area that’s going to explode in the very near future is augmented reality and full-blown virtual reality. It’s a field with unlimited possibilities, and we are just beginning to scratch its surface.
Seemingly, as innovation is the way to go, they make for great value investments, both short and long term. You do need to know what you are doing, as it’s not as simple of an endeavor as putting your money into the S&P 500. That’s why doing your own research and following closely what other investors are doing is important.